Opinion: The rare earth challenge

The shortage of rare earth elements creates another opportunity for technology innovation.

WASHINGTON -- It’s probably no accident that Congress has decided to take up what is for lawmakers the esoteric issue of rare earth elements. It’s election season, after all, and the fact that China controls an estimated 96.8 percent of rare earth materials production makes Beijing an easy target for nervous politicians looking for a foreign bogeyman. It’s also far easier to blame China for our economic woes than it is for politicians to take responsibility for the mess.

This is not to downplay the significance of the issue. The global electronics industry is making wider use of rare earth elements for products ranging from advanced batteries used in hybrid vehicles and advanced magnets to phosphors used in LED lighting. Moreover, it appears that China is leveraging its monopoly in the mining and processing of rare earth materials to manipulated world markets through export limits.

The issue even played a role in the last month’s standoff between China and Japan over the release of a Chinese ship caption whose vessel had collided with Japanese Coast Guard ships in disputed waters. The Chinese captain was released after Beijing cut off Japan’s access to rare earth materials.

The situation with rare earth elements is akin to the state of American oil refineries. As of 2008, according to the U.S. Geological Survey, rare earth elements were not being mined in the U.S. Similarly, no new U.S. oil refineries have been built for years.

Hence, it seems obvious to us that for national security reasons the U.S. should look for ways to renew the mining and processing of rare earth elements while at the same time instituting programs similar to those in Japan designed to recycle rare earth elements in consumer electronics and other products. At the same time, the industry should begin immediately to look for alternative materials for producing new products. The search for new materials has already begun in areas like advanced batteries for electric cars.

What is needed is less demagoguery on the rare earth issue and more technology innovation. The relative scarcity of rare earth elements in fact presents an opportunity for U.S. innovation in materials research, product design and manufacturing technology. As with foreign oil, the U.S. should seek to reduce, within physical limits, its current dependency on foreign sources of rare earth elements.

Japan is already doing this. According to reports, Japanese manufacturing giant Hitachi has developed new hybrid car engine technology that eliminates the need for expensive rare earth materials. Hitachi’s motor uses a ferrite magnet based on ferric oxide material widely used in the steel industry. Japanese universities are also are reportedly working on new composite materials for making powerful magnets previously made using rare earth elements.

Surely, the folks at MIT and Caltech can roll up their sleeves and come up with similar advances in new materials for a host of current and new applications.

In 2008, the '70s American band Rare Earth staged a comeback with "A Brand New World." It's time for brand new thinking on the industry's response to it rare earth problems,

Then maybe we can remaster those Rare Earth eight-track tapes and sell them to the Chinese.

on other hand we are on the best way to get strong; the supreme court decided that money could by the government, we will have soon how -Mussolini called it- corporatism, with all of it's benefits and Charlie Rose with his open mind will be passé

well not so long time ego the US used to produce that "rare elements", but it was cheaper to import it from China so just stopped the local mining and production it was also one of that "such a good economical decision" the whole business was dismantled, technology gone,may be it is time to start make secessions -which could effect national safety - not just with the next quarter in mind TSA can't prevent everything..

I have a bit of experience in the motor arena and did some research on this. First, the material we are talking about is Neodymium which is needed for Neodymium Iron Boron permanent magnets. These are the highest energy density permanent magnets known. Wind power, Electric vehicle motors, and medical imaging equipment all use it.
Second, the point about Ferrite is very clear, if you need low price and can sacrifice power density, any electric motor design can be converted to Ferrite.
What is less well know is how it got this way. Since General Motors was a primary patent holder for the Neodymium Iron Boron magnet and a spin casting process for making the material, one wonders how the US lost its grip. Maybe GM was cash poor and the Magnaquench division in Indiana was worth more to them as cash than as a source for high performance magnets. But since US military equipment uses the magnets, why didn't the Defense Department block the sale of Magnaquench to New Materials Technology in Canada which is a front for a group of Chinese investors. Who promptly shut down the Indiana manufacturing facility as "too expensive to operate within the cost structure of the rest of the company".
Where we are today is not as dire as is being reported. The financial markets have been speculating for a couple of years about Neodymium and the REE. But the fact is that we have huge mines in the US and in Australia. The US mines have been under development for several years by Molycorp who had the foresight to get into the California mine with private equity. They are in a manufacturing agreement with Arnold magnetics to make NeFeB magnets here in the US to compete with the short Chinese supply.
I don't think there is a long term problem, but there is sure a lot to answer for in terms of how the US government let us get here. Same with Carbide for cutting tools, Zirconium and other strategic resources.

India wants to fill this gap and be a supplier to Japan and possibly to US also in future .
See this new headline :
http://economictimes.indiatimes.com/news/economy/foreign-trade/India-to-export-rare-earths-to-Japan/articleshow/6812060.cms

You are absolutely right. "Geopolitics are a complex game" -- indeed.
I do see China's point of view, too. If they have resources that others don't, why wouldn't use them to their advantage?
The problem is, once you become a member of WTO, there are certain rules that we all need to abide by in our busienss conduct. I don't mean to get on the high horse (but you are right, the media tends to do that). But look, pointing out the obvious (even if they happen to be some sore issues to certain parties) is also our job, rather than letting it pass as "well, that's the way China does its busienss."

No self-respecting country would sign up for a proposition where its non-renewable resources are on a one-way track: export! I don't fault China for her stance; her methods may be crude, but by and large, her intention may be in the right place. The media odds are against her, especially in the west, to the extent that no amount of PR may fix it in the near future!
Geopolitics are a complex game; they are a class of infinite games where the parties may declare their intentions upfront but have no intention of reaching Nash equilibrium. China seems to be doing just that.
Dr. MP Divakar

Hi Pixies,
From what I know of the REE issue, China had announced a number of years ago that they were going to steadily lower REE exports over a number of years. This is completely reasonable in that they're being transparent about it giving everyone time to prepare.
Now it seems like they're doing an outright unofficial embargo as retaliation for various alleged slights against them. From an American's point of view, it seems like China is only hurting themselves in the long run: the REE embargo won't cause major lasting damage due to existing stockpiles, but it will make it politically easier for the rest of the world to retaliate against China on issues such as trade.
What's the Chinese perspective on all of this?

I agree, the market will regulate this. If Chinese supply is restricted for some reason or is unable to meet the demand, then prices go up and this provides incentive for mining companies in many other countries to start producing these not-so-rare metals.